Scribd Logo
Upload

Welcome to Scribd!

  • Problem 6

    Uploaded by

    Christine Marie Ramirez
    2 views1 page
    The document discusses weaknesses and risks in an accounts payable system, and corresponding controls. It notes that a clerk setting up liabilities based only on invoices poses a risk of paying for unordered or overpriced items. A three-way match of documents is a control. It also notes risks of a clerk authorizing payments and writing checks, which can be controlled through segregation of duties. Finally, it discusses risks of a clerk having access to both the AP subsidiary and general ledgers.

    Original Description:

    Copyright

    © © All Rights Reserved

    Available Formats

    DOCX, PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    Report this Document
    The document discusses weaknesses and risks in an accounts payable system, and corresponding controls. It notes that a clerk setting up liabilities based only on invoices poses a risk of paying for unordered or overpriced items. A three-way match of documents is a control. It also notes risks of a clerk authorizing payments and writing checks, which can be controlled through segregation of duties. Finally, it discusses risks of a clerk having access to both the AP subsidiary and general ledgers.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    2 views1 page

    Problem 6

    Uploaded by

    Christine Marie Ramirez
    The document discusses weaknesses and risks in an accounts payable system, and corresponding controls. It notes that a clerk setting up liabilities based only on invoices poses a risk of paying for unordered or overpriced items. A three-way match of documents is a control. It also notes risks of a clerk authorizing payments and writing checks, which can be controlled through segregation of duties. Finally, it discusses risks of a clerk having access to both the AP subsidiary and general ledgers.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    of 1

    Problem 6

    1.

    a. Weakness: Clerk sets up a liability based solely on the vendor’s invoice.

    b. Risk: The company may be paying for the things they did not order, did not receive or is paying higher
    price.

    c. Control: The clerk should perform a three-way match of purchase order, receiving report, and invoice
    to verify that the liability is legitimate and correctly stated.

    2.

    a. Weakness: AP clerk authorizes the liability and writes the check to pay it.

    b. Risk: The clerk could create a false vendor, set up a liability and disburse funds

    c. Control: Segregation of duties between the tasks of authorizing a liability and check writing

    3.

    a. Weakness: AP clerk has access to both the AP subsidiary and general ledger

    b. Risk: Balancing general ledger control accounts with corresponding subsidiary ledger can help detect
    certain type of errors and irregularities. This ability is lost when same individual is responsible for
    updating both accounts.

    c. Control: Segregation of duties between the general ledger function and other accounting function

    You might also like